• OUEHT's 2Q/1H18 DPU of 1.17/2.43 Scts was broadly in line with our expectations.
• Mandarin Orchard Singapore performance affected by lower corporate segment, Crowne Plaza Changi Airport still ramping up.
• Retail leases continue to be renewed positively.
• Maintain ADD with a slightly lower Target Price of S$0.89.

2Q18 Results Summary

OUE Hospitality Trust (OUEHT)'s 2Q18 DPU fell by 3.3% y-o-y due to lower revenue from hospitality and retail as well as absence of income support for Crowne Plaza Changi Airport (CPCA) which was fully drawn down by 3Q17. This was partly offset by lower operating expenses and reduced interest expense.

2Q/1H18 DPU of 1.17/2.43 Scts made up 23%/47% of our FY18 forecast, broadly in line with expectations.

MOS RevPAR Dragged by Lower Corporate Segment

Mandarin Orchard Singapore’s (MOS) RevPAR fell a marginal 0.5% y-o-y to S$209, with a decline in the corporate segment, partly mitigated by higher transient business as well as lower F&B sales. The overall transient business portfolio made up 53% of room revenue in 1H (50% in 1Q), while the wholesale segment accounted for 26% over the same period (24% in 1Q). This made up for the decline in corporate business which accounted for 21% of room revenue (26% in 1Q).

Management continues to be upbeat on 2H outlook.

Source: CGS-CIMB Research - 27 Jul 2018